What is Gross 2?
Gross 2 salary, often known as "Total employer cost", represents the actual financial amount your company must allocate to employ you and pay your salary.
What Does Gross 2 Consist Of?
Gross 2 is a broader and larger amount than Gross 1. Mathematically speaking, it consists of:
- Gross 1 salaryThe previously explained amount containing your net salary, pension insurance, and taxes.
- Contributions "ON" salary (Health insurance)These are additional levies that the state requires from the employer on top of the Gross 1 salary amount. In most countries of the region, this primarily includes the health insurance contribution. Since the employer pays it on top of your Gross 1, these contributions are called contributions "on salary".
Why is Gross 2 So Important?
When you ask for a net raise of 100 KM, the cost of that raise for the employer is not 100 KM. Due to the necessary payments for pension, health, and taxes to the state, that raise costs the employer significantly more (often up to 180 KM).
Therefore, when you negotiate a new salary, the employer calculates Gross 2 in mind to assess whether you are a profitable investment for them.